Valuation Overview

Growth Story

Over the next few years, revenue is expected to grow by 6.50%, lower than industry average of 12.71%.

Growth Trajectory

Profitability

In the growth phase company makes 29.88% profit on every dollar of sales, higher than industry average of 20.42%.

Profitability Trajectory

Risk Profile

Investors expect at least 9.55% return to justify the risk of holding stock.

Risk vs Return

Required Return (Cost of Capital) (%)
Return on Invested Capital (%)

Financial Health Overview

Enterprise Value
215.89B USD
Equity Value
189.05B USD
FCF Yield
84.47%
Average ROIC
21.72%
Cost of Capital
9.28%
P/E Ratio
11.60x
Financial MetricMost Recent 12 months (USD)Previous Year (USD)
Revenues63.62B USD64.17B USD
Operating Income or EBIT21.17B USD21.52B USD
Interest Expense1.28B USD1.27B USD
Book Value Of Equity48.99B USD46.31B USD
Book Value Of Debt35.40B USD37.11B USD
Cash and Marketable Securities8.62B USD13.69B USD
Number of Shares Outstanding2.50B--
Minority interests59M USD0 USD
Current Stock Price84.42 USD--
Effective Tax Rate14.00%--
Marginal Tax Rate25.00%--

Performance vs Industry

Revenue Growth
-13.57%
-0.87%Company
vs
12.71%Industry
Below Industry
Operating Margin
+12.87%
33.28%Company
vs
20.41%Industry
Above Industry
Merck & Co., Inc. demonstrates superior operational efficiency with margins above industry average, indicating effective cost management.

Terminal Value Analysis

Growth Rate
4.59%
Cost of Capital
8.83%
Return on Capital
8.83%
Reinvestment Rate
52.09%
Terminal value represents 52% of total enterprise value, based on 4.59% perpetual growth and 8.83% discount rate.

Equity Value Breakdown

ComponentValueType
Present Value (Terminal Value) 111.94B USD Add
Present Value (Cash Flow Over Next 10 Years) 103.95B USD Add
Value of Operating Assets 215.89B USD Sub-total
Debt 35.40B USD Subtract
Minority Interests 59.00M USD Subtract
Cash 8.62B USD Add
Value of Equity 189.05B USD Sub-total
Number of Shares 2.50B shares Divisor
Estimated Value per Share (Fair Value) 75.52 USD Total
Current Market Price 84.41 USD Reference

Financial Projections

Total FCF Present Value
103.95B USD
Avg Revenue Growth
5.18%
Avg Operating Margin
29.12%
Avg ROIC
21.72%
Year 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Terminal Year
REVENUE
Revenue66.69B USD71.02B USD75.64B USD80.55B USD85.79B USD91.04B USD96.26B USD101.42B USD106.47B USD111.37B USD116.49B USD
Growth Rate 4.84% 6.49% 6.49% 6.49% 6.49% 6.11% 5.73% 5.35% 4.97% 4.59% 4.59%
PROFITABILITY
Operating Income22.19B USD22.03B USD22.60B USD23.15B USD23.69B USD25.14B USD26.58B USD28.00B USD29.40B USD30.75B USD32.16B USD
Operating Margin 33.28% 31.01% 29.88% 28.74% 27.61% 27.61% 27.61% 27.61% 27.61% 27.61% 27.61%
EBIT (1-tax)19.09B USD18.94B USD19.43B USD19.91B USD20.37B USD21.06B USD21.69B USD22.23B USD22.69B USD23.06B USD24.12B USD
CASH FLOW
Reinvestment2.93B USD3.13B USD3.33B USD3.55B USD3.56B USD5.14B USD5.08B USD4.97B USD4.82B USD5.04B USD12.56B USD
Free Cash Flow16.15B USD15.81B USD16.10B USD16.36B USD16.81B USD15.91B USD16.60B USD17.26B USD17.87B USD18.01B USD11.55B USD
Terminal Value--------------------273.24B USD
Present Value14.74B USD13.17B USD12.24B USD11.36B USD10.65B USD9.22B USD8.80B USD8.38B USD7.96B USD7.38B USD—
EFFICIENCY
ROIC 25.19% 24.06% 23.75% 23.38% 22.96% 22.82% 22.26% 21.69% 21.11% 20.53% 8.83%
Cost of Capital 9.55% 9.55% 9.55% 9.55% 9.55% 9.40% 9.26% 9.11% 8.97% 8.83% 8.83%
Sales/Capital 1.47x 1.47x 1.47x 1.47x 1.47x 1.01x 1.01x 1.01x 1.01x 1.01x —

Profitability & Efficiency

Operating Margin (%)
ROIC (%)

Value Creation Analysis

ROIC (%)
Cost of Capital (%)

Operational Cash Flow Analysis

Free Cash Flow ($B)
Reinvestment ($B)